SoftBank Issues ¥1 Trillion Bonds to Japanese Retail Investors for AI Investment

SoftBank will issue ¥1 trillion in corporate bonds to individual investors in Japan, equivalent to approximately $6.3 billion, setting a record for corporate bond issuance to individuals in Japan. The bonds will have a term of seven years, with an interest rate tentatively set between 4.3% and 4.9%, and each bond will have a face value of ¥1 million. The funds will be used for AI investments and to repay old debts, with OpenAI being one of the main funding needs. This marks SoftBank's third bond issuance to retail investors this year, having raised ¥418 billion and ¥260 billion in April and June, respectively. SoftBank has committed to an additional investment of $30 billion in OpenAI, with the final $10 billion to be paid in October, bringing the total investment to $64.6 billion, representing about 13% ownership. However, the ¥1 trillion is still insufficient to cover the funding gap, with Bloomberg Intelligence analyst Sharon Chen estimating that SoftBank will still have over $20 billion in funding shortfall after the funds are received, potentially leading to further overseas bond issuance in the short term. To attract retail investors, SoftBank is offering interest rates significantly higher than the yields on Japan's 5-year and 10-year government bonds, which are approximately 2.13% and 2.88%, respectively. SoftBank expects to receive an A rating from Japan Credit Rating Agency (JCR), but S&P currently assigns a BB+ rating, which is below investment grade. Analysts point out that banks are finding it difficult to continue increasing their investments due to rating, term, and funding pressures, leading SoftBank to increasingly rely on individual investors.

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